Governor David Paterson and Assembly Speaker Sheldon Silver last Friday announced that Buffalo-based Delaware North Companies Gaming and Entertainment had been chosen to build and operate a casino with 4,500 video lottery terminals (VLT) at Aqueduct racetrack.

Paterson’s communications director Risa Heller said in a statement that of the bids put forth, Delaware North presented the strongest financial proposal with an up front payment of $370 million. Heller touted Delaware North’s successful track record operating three upstate casinos and “vast experience operating VLTs.”

Heller said the governor is also pleased that Delaware North is committed to a process to specifically address the Queens community’s development needs, and will effectively build on that effort in future development phases.

“This is the best deal for New Yorkers,” said Heller.

Sisa Moyo, a spokeswoman for Silver, said that Delaware North has a proven successful track record in New York State, adding, “the governor selected them and we’re comfortable with that decision.”

However, Republican Senate Majority Leader Dean Skelos faulted the choice, saying, “it appears that in an effort to close the budget deficit, Governor Paterson has made a choice that may not be in the best long-term interests of the state or for the communities that surround Aqueduct.”

Paterson revealed last week that the state faced a $2 billion budget deficit.

Skelos added, “it is our belief that unless we make Aqueduct a true destination venue, this project will not generate the largest possible benefit.”

Heller shot back, saying that Skelos pressed the governor to make a decision, all the while refusing to disclose which of the Aqueduct proposals he actually favored.

“It is shocking that Senator Skelos, who claims to understand the importance of this revenue stream and who has repeatedly and publicly called on the governor to award this contract, has now decided to stall a significant economic development project,” she said.

John McArdle, a spokesman for Skelos, countered, “we have said that there must be an economic development component for Aqueduct, which is what the community wants and what our intention was all along. And since there is no component, we cannot support the Delaware North bid as it was proposed.”

McArdle said that Delaware North’s two bidding competitors proposed more sweeping economic development efforts for the site, including hotel, entertainment, and retail space. The Delaware North bid features mainly just the casino, though with a future option to expand.

Should the deal with Delaware North be approved, construction is expected to take 15 to 18 months, meaning it would likely begin gambling operations in early or mid-2010, generating a projected $450 million in revenue per year.

The other bidders for the casino VLT’s offered the state less up-front money but promised a bigger return in the long term. SL Green and Hard Rock Entertainment both offered $250 million up front, while Australian-based Capital Play and Mohegan Sun casino offered $100 million up front.